Premium Financing With Indexed Universal Life: Part IPremium Financing With Indexed Universal Life: Part I

In the last 15 years, premium financing has become a popular strategy for funding large trust-owned life insurance (TOLI) policies. The rise of premium financing plans can be attributed to a number of factors, including high-net-worth clients being comfortable borrowing funds to finance transactions, ongoing favorable borrowing rates and the development of indexed universal life (IUL) policies that reflect the returns of an equity index fund (index fund), typically, the S&P 500.¹ Lenders are willing to make these loans because they’re fully secured at all times and are therefore never at risk.

Premium financing provides many opportunities to fund life insurance using other people’s money.  Appropriate uses of premium financing begin with ...